Here’s Context for Hyatt’s 40% Bonus on Purchased Points

Hyatt Gold Passport is offering up to a 40% bonus on purchased points through July. It’s targeted for elites.

In some ways that seems a strange limitation.

  • Elites already have the most points
  • They’re most likely to use points to greatest savvy effect, why discount for them?
  • If it makes sense to offer to them, why not to everyone?

One interesting truism is that people who earn the most points are also the ones who value them the most and tend to buy. Your points buyers are the people most engaged in the program.

Of course, Hyatt regularly offers 40% purchase bonuses that aren’t targeted.

(They’ve recently upped the ante — the standard bonus offer from Hyatt for purchasing points in the past had been 30%.)

Hyatt has been about the most aggressive hotel program at selling points when they’ve taken the stance that their program is meant to put heads in beds and engender loyal business. Their credit card, even, was about extending the Hyatt relationship into the wallet and across more transactions… and supposedly not about monetizing the points currency by selling in bulk to a bank. And yet here we are regularly aggressively selling points at a discount. Go figure.

You might even say they’ve become the US Airways of hotel programs (they even have partner awards.. with MGM… though those usually aren’t a great deal).

And in fact the system they’re using to verify eligibility for the promotion looks exactly like the one US Airways used to use when they targeted. (Which is really just a function of Points.com repurposing technology).

With a 40% bonus Hyatt is selling you points at 1.71 cents apiece. I personally value them at about 1.4 cents apiece so this doesn’t make me a buyer (points would have to be priced at less than 1.4 cents for that).

You can sometimes get more than 2 cents apiece out of your points so if you were going to pay cash for a room anyway buying points can be used to get a room discount. This is a very limiting case.

And topping off an account could make sense if you were close to an award. Once place where it’s a little better is with cash and points awards which are effectively discounted paid room rates (which count towards elite status and promotions, and can be upgraded to suites with Diamond confirmed suite upgrades).

That’s because if you need to top off an account to have enough points to make a cash and points award, then buying these points acts as a further ticket to buy points at an even greater discount — category 2 through 6 cash and points awards let you buy points at 1.2 – 1.3 cents apiece.

(Category 1 and 7 cash and points awards price the points you’re buying back at 2 cents apiece… but cash and points awards are still better than buying points at 2 cents because cash and points awards are themselves points/promotion/status-earning.)

So average the total cost of your points purchase with the cost of points when making that award and it brings down the total cost still… not to a price where I’d speculatively buy points, but to a place where you may be getting a good discount on a room you’d otherwise pay full price for.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. But if you purchased the points with your Hyatt credit card, thereby earning 5x Hyatt points, wouldn’t that efffectively bring the price per point paid to well under your calculation of $0.0171???

  2. Assuming, Jonathan, that it’s processed by Points.com, you usually only get 1 cpm regardless of whether it’s a “Hyatt purchase” or not

  3. Right now there is also a 20% rebate for using Hyatt points, so that can make a big difference.
    Not sure if this was targeted.

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